Corner Office Report

Corner office views used to be the most desired space in the workplace. Now, that view overlooks a parking lot with empty spaces and desks are empty too because working from home is the new norm during COVID-19.

 

Commercial office space on Daniel Island has taken a toll since the coronavirus infiltrated businesses’ workspaces and nudged employees into remote settings. The island’s two largest employers, Blackbaud Inc. and Benefitfocus Inc., are operating at minimal capacity with Benefitfocus offering a huge chunk of space for sublease.

 

When Blackbaud made cuts to its staff in May 2019 due to budgetary matters spurred by COVID-19, the tech company did not confirm the number of employees laid off. Benefitfocus disclosed that 250 employees were let go in April 2020.

 

A reduction in employment on the island and a pandemic-driven shift from the office to the home has created vacancies for future tenants. Additionally, Blackbaud's old office space at 2000 Daniel Island Drive, now owned by Holder Properties, features a total space of 230,000 square feet for potential use of office space. Whereas Benefitfocus boasts 289,000 square feet of  office space that isn’t being optimized to the fullest. 

 

When COVID-19 first took siege in March 2020, office spaces on Daniel Island were approximately 80% occupied. Over the past year, business occupancy has plummeted to 50%, according to Lee & Associates principal Pete Harper.

 

With 33 years in the commercial development and brokerage business, Harper specializes in office and retail leasing and sales for third party owners and tenants. Now more than ever is an office renter’s market. 

 

Harper noted that the high volatility in the commercial office space market has opened doors for future buyers. He foresees that such vacancies will translate into deal making between landlords and tenants with better offers and shorter leases. 

 

“It’s going to take some work to get it all leased back up but I think the landlords and the brokers are ready to do it,” Harper said. 

 

According to an April 2021 report from Lee & Associates, the commercial real estate firm expects a strong positive absorption in Charleston’s office market, especially in the third and fourth quarters this year.

 

As more COVID-19 vaccines are administered in the region, Lee & Associates has observed a dramatic increase in the number of showings of office spaces and an uptick in deal making.

 

“Daniel Island has been so resilient over the years,” Harper said. “It’s got such a great amenity base for employers that it shows very well to a prospective tenant.”

 

Harper noted that retail and office tenants are ideal for Daniel Island’s commercial real estate scene.

 

“What somebody should expect if they’re coming to Daniel Island is the level of amenities, the nearby retail, residential and quality of development,” Harper added. 

 

“... It’s pretty unique for the Charleston market to have those amenities within walking distance.”